Council tax and business rate dodgers cost North East councils £39m

Cash-strapped councils in the North East failed to collect more than £39m in council tax and business rates last year

Protests against cuts to libraries and swimming pools drew huge support. Millions in unpaid tax could have eased the cuts

Cash-strapped councils in the North East failed to collect more than £39m in council tax and business rates last year.

New figures from the Department for Communities and Local Government show that Newcastle City Council was owed more than £3.4m at the end of the 2012/13 financial year – enough to pay for all the arts and library funding the authority has cut from its budget, with more than enough change left over to help save City Hall and the City Pool.

Gateshead was due more than £5.7m, with North Tyneside owed £3.5m, Northumberland almost £5m and South Tyneside £2.17m.

But all those figures were much less than Durham County Council, which had a shortfall of more than £14.7m at a time when councillors were slashing another £20.9m from their budget. The councils have all cited a number of reasons for not collecting all the cash.

Paul Darby, Durham County Council’s head of finance, blamed a move to a new IT system – but with the outstanding debt some £3.4m less than the amount owed the previous year, he said the authority was on track.

“To balance our annual budget, we forecast we need to collect 98.5% of council tax within three years and our current performance, since becoming a unitary council in 2009, looks set to meet that target.”

Cash-strapped councils in the North East failed to collect more than £39m in council tax and business rates last year

Both South Tyneside and Gateshead councils said while they strived to collect all the money they were owed, the latest figures needed to be viewed in light of the current financial climate, when it might not always be best to pursue people for their unpaid bills. Gateshead Council strategic director of finance and ICT, Darren Collins, said: “These figures need to be considered in light of the current economic situation, particularly in a region where many families and businesses are facing real pressures.

“We continue to operate a firm but fair approach to enforcement of payments. With non-domestic rates in particular, a small number of businesses can have a significant impact upon the figures. We do all we can to collect unpaid rates, but when businesses become insolvent we are often unable to do so.

“Naturally at a time when local authorities themselves are working hard to manage services with ever decreasing resources, any increase in uncollected payments is unwelcome. But we remain committed to collecting all payments that are due.”

A South Tyneside Council spokesman said by the end of the last financial year its tax collectors had netted 97.1% of the council tax it was due - above the national average of 96.1% for metropolitan authorities.

“We remain committed to improving council tax collection rates, and we promote direct debit, debit card payments, payments via the council’s website and PayPoint to encourage taxpayers to pay their accounts on time,” she said. “We also take action against any non-payers, though court action and use of bailiffs is a last resort.

“Though we rigorously pursue debts, we are of course concerned when people find it difficult to pay their council tax and we would urge anyone in this situation to contact us as soon as possible so that we can explore flexible repayment arrangements that take their circumstances into consideration.” A Newcastle City Council spokesman said: “Council tax is a small part of what the council needs to fund vital public services, the rest comes from Government grants and other sources of income.

“The council has a responsibility to collect council tax and business rates, and has collection rates that are higher than most similar sized authorities.

“We pursue people who refuse to pay these charges vigorously for a number of years and only stop when it becomes uneconomical to do so. For those who are genuinely unable to pay we urge them to contact us as soon as possible so we can make payment arrangements and offer advice. We also work very closely with the Citizens Advice Bureau and other voluntary sector organisations so they can get the help that they need.

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